X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Steel: Sailing in rough water - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jun 18, 2001

    Steel: Sailing in rough water

    With a downturn in the global economy, the steel industry is facing tough times. Global steel consumption, which grew by 5.8% in FY01, is expected to grow 2.3% in the current year. As a result of the demand supply gap in the industry steel prices are on a downhill journey.

    United States, which accounts for around 15% of the world steel consumption, is expected to record a negative growth rate of 0.1% in the current year. Many companies in the US are facing a financial meltdown, which could further pressurize steel prices. After touching a low of US$ 180 per tonne in December, steel prices have bounced back to US$ 210 per tonne. However, the rally has now halted and the prices are unlikely to recover at least in the next six months, as there is an absence of growth in demand.

    According to the World Steel Dynamics (WSD) production of steel is expected to fall by 2% to 829 m tonnes in the current year, as compared to a rise of 7% in the previous year. The decline in production could help steel producers in increasing product prices, particularly for value added steel products.

    In the medium term, pressure on the industry could lead to acceleration in consolidation activity. Usinor of France and Luxembourg’s Arbed have already announced merger plans, as have NKK and Kawasaki, Japan’s second and third largest steel makers.

    On the other hand, sustained demand from the infrastructure segment has resulted in an uptrend in domestic demand for steel. Finished steel production registered an impressive growth of 7.7% to 29.7 m tonnes in FY01. Consumption too rose by about 7%. Steel exports registered a growth of 9.5% despite a global downtrend. While SAIL’s production grew by 7.9%, Tisco’s production was up by 4.9%.

    (Consumption in million metric tonnes) 1999 2000 Change 99-00 2001 Change 00-01
    China 131 137 4.7% 147 7.3%
    Japan 69 74 7.1% 73 -0.7%
    Total Asia 311 332 7.0% 346 4.0%
    US 111 115 3.8% 115 -0.1%
    Australia & NZ 7 6 -6.0% 6 -4.8%
    Africa 15 15 3.4% 16 2.0%
    Middle East 15 16 7.3% 16 1.2%
    World Total 711 752 5.8% 769 2.3%

    Source: IISI

    Fiscal year 2001-02 has started on a dull note for the Indian steel sector. Production has fallen by 1.8% in April 2001. The future outlook is not encouraging as reflected from the sliding growth rates in industrial production. The index of industrial production (IIP) registered a growth of just 2.7% YoY in April ’01 compared to 6.5% recorded in April ’00. The manufacturing sector witnessed a decline in growth rates by 440 basis points to 2.7% in April. The numbers are indicative of the slowing Indian economy, affected by the sluggish world economy. The Indian steel producers could be hit over the next six months, as demand remains at lower levels. However, recovery could come with a rise in domestic construction activity.

     

     

    Equitymaster requests your view! Post a comment on "Steel: Sailing in rough water". Click here!

      
     

    More Views on News

    Tata Steel: A Strong Quarter (Quarterly Results Update - Detailed)

    Aug 12, 2017

    Tata Steel reported a robust operating performance on the back of strong domestic and European operations.

    SAIL: Loss at EBITDA Level Due to Higher Raw Material Cost (Quarterly Results Update - Detailed)

    Jun 12, 2017

    The company registered a negative EBITDA of Rs 2.64 billion during the quarter. This is on the back of an increase in raw material prices.

    Tata Steel: Strong Quarterly Performance (Quarterly Results Update - Detailed)

    May 22, 2017

    Tata Steel reported a robust operating performance on the back of strong domestic and European operations.

    SAIL: Pressure Continues. Loss at Operating Levels... (Quarterly Results Update - Detailed)

    Feb 15, 2017

    SAIL has reported a 26.2% YoY increase in the topline while the bottomline reported a loss of Rs 7.94 billion.

    Tata Steel: Loss from Discontinued Business Mars Performance (Quarterly Results Update - Detailed)

    Sep 27, 2016

    Tata Steel has reported a 6.3% decline in the topline while the bottomline was in red in 1QFY17.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE METAL


    Aug 16, 2017 (Close)

    S&P BSE METAL 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS